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Calorie Matters

Jul 10, 2011 • Behavioral Economics, Businesses, Demand, Supply, and Markets, Economic Debates, Households, Regulation • 183 Views    No Comments

Learning that a Big Mac has 540 calories and a large fries, 500, will people select a salad? According to the Washington Post, “No.” We do not have the will power to avoid long term cost when faced with short term benefit.

This takes us to the calorie-labeling mandate for national food chains in new health care legislation. One Carnegie Mellon study suggests people make healthier decisions when they are more convenient. During their study, they just changed the position of healthy food on a Subway menu and people actually selected it more frequently. By contrast, when they labeled calories, there was no impact.

The Economic Lesson

Behavioral economists believe that cost, defined as sacrifice, shapes our behavior. With calorie labeling, we are comparing short term benefit (the pleasure of a Big Mac) to long term cost (obesity and heart disease). When cost changes–even through convenience–we behave differently.

An Economic Question: As a Congressional advisor who knew about academic research on calorie labeling and the impact of cost, how would you revise the FDA mandate?

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